Amidst a volatile market, JELD-WEN Holding Inc (JELD, Financial) recently experienced an impressive daily gain of 11.94%, although it has seen a 3-month loss of -3.82%. With an Earnings Per Share (EPS) of $1.54, investors are contemplating whether the stock is modestly undervalued. This article dives into a valuation analysis to uncover the true worth of JELD-WEN Holding, inviting readers to explore the nuances of its market value.
Company Introduction
JELD-WEN Holding Inc is at the forefront of door and window manufacturing, crafting and distributing a wide array of interior and exterior building products. Its offerings are essential in new residential single and multi-family homes as well as non-residential buildings, with North America being its largest revenue-generating region. At a glance, JELD-WEN Holding's stock price of $15.85 stands against a GF Value of $20.5, suggesting a potential undervaluation. This juxtaposition sets the stage for an in-depth valuation analysis.
Summarize GF Value
The GF Value is a unique metric that encapsulates the intrinsic value of a stock, considering its historical trading multiples, a GuruFocus adjustment factor based on the company's past performance, and future business performance projections. When the stock price hovers significantly above the GF Value Line, it may be overvalued, suggesting lower future returns. Conversely, a price well below the GF Value Line indicates potential undervaluation and the prospect of higher future returns. Currently, JELD-WEN Holding (JELD, Financial) appears modestly undervalued, which might signal a promising long-term investment opportunity.
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Financial Strength
Before investing, it's crucial to gauge a company's financial strength. A robust financial foundation diminishes the risk of permanent loss. JELD-WEN Holding's cash-to-debt ratio of 0.18 trails behind 76.91% of its peers in the Construction industry. However, its overall financial strength score of 6 out of 10 suggests that JELD-WEN Holding maintains a fair financial position.
Profitability and Growth
Consistent profitability over time signifies a lower risk profile for potential investors. JELD-WEN Holding has achieved profitability for 8 out of the last 10 years, with a revenue of $5.20 billion and an Earnings Per Share (EPS) of $1.54 in the past twelve months. Despite an operating margin of 4.72%—ranking below 51.29% of its industry counterparts—JELD-WEN Holding's profitability score is a solid 7 out of 10.
Growth is a vital valuation metric, as companies that expand swiftly tend to generate more shareholder value, particularly when the growth is profitable. JELD-WEN Holding's average annual revenue growth rate of 11.7% surpasses 73.86% of companies in the Construction industry. However, its 3-year average EBITDA growth rate of 1.6% does not fare as well, sitting below 55.12% of industry competitors.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) further illuminates its profitability. A higher ROIC than WACC indicates value creation for shareholders. JELD-WEN Holding's ROIC over the past year is 6.75, which unfortunately falls short of its WACC of 8.54, suggesting the company may not be generating sufficient returns on its investments.
Conclusion
In summary, JELD-WEN Holding (JELD, Financial) presents signs of being modestly undervalued. The company's financial health is fair, and its profitability stands firm. However, its growth and ability to generate returns on invested capital are areas for potential improvement. For a deeper understanding of JELD-WEN Holding's financial journey, you can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
